How I Did It – Kushan Kodituwakku

Our new series dedicated to entrepreneurship

By Shamindra Kulamannage.

Published on March 13, 2015 with 1 Comment

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We are launching a new section in Echelon -‘How I Did It’ – dedicated to covering entrepreneurship. We aim to cover the triumphs, and sometimes the defeats, of being an entrepreneur. These are first-hand accounts of the most difficult management challenges faced by men and women in leadership. We think our HIDI reporting will help prepare you for the hard decisions ahead as a manager and leader.

THE ZEN CEO
Orange Electric’s Kushan Kodituwakku was thrust in to leadership. His unlikely success despite his inexperience, chaotic economic conditions and a hostile takeover bid present some valuable insights.

No fictional tragedy could have been scripted as heartlessly as the very real challenge that confronted Kushan Kodituwakku three months after joining the family electrical fittings business. Few 22-year olds can have a brush with disaster in the scale he confronted and have prevented that company from sinking. The business Kodituwakku inherited when his father – the firm’s founder’s sudden passing – had a number of challenges. The first being idiosyncrasies related to its operational structure which only the founder could have understood. Predictably, Kushan Kodituwakku made many mistakes in rapid succession. For the burly, fresh faced electrical engineering graduate form the US, the harsh realities only came in to focus when the firm’s (then known as Clipsal Lanka) bankers made a claim for its asset.

Clipsal Lanka, a joint venture with an Australian firm, manufactured electrical fittings such as light switches and circuit breakers and had a modest million-dollar topline in 1996. In the three months since becoming the boss, Kodituwakku kept the business running and unwittingly piled on more inventory to the dangerously high levels the firm already had. “This was a wake-up call,” he recalls. “I told myself then, ‘things are bad, I need to take control’”.

Keeping it simple
Clipsal was unraveling. Besides the inventory buildup—due due to component shortages stalling manufacturing –the the firm’s accounting systems were esoteric and senior staff were leaving. Some also took advantage of Kodituwakku’s inexperience to misappropriate finances.

“The business was too complex to understand,” he says about the firm that manufactured five types of switches and three types of electrical sockets in 1996. Kodituwakku focused on five basics to turn the firm around; stocks, debtors, creditors, sales and profits. “First, we had to settle our creditors because they were breathing down my neck. So we focused on daily collections to pay the banks.”

In three months the banks were starting to believe that Clipsal wasn’t going to sink after all and in a year the business was on solid operational and financial ground. Clipsal kept growing, and in five years its topline grew ten-fold to $10 million. Leaps in growth – when a conflict in the North of the island was raging – wasn’t a result of incremental advancements to its limited Clipsal branded product line.

After a meeting with Clipsal’s Australian brand owners – who refused to visit Sri Lanka for the meeting because the war had intensified – Kodituwakku started talking up themes that eventually led to Clipsal ten-fold topline increase. He wanted to stretch the brand to manufacture the entire set of components from the electricity meter to the light bulb and everything in between from cables to circuit protection. Self-belief can have the unlikeliest triggers and Sri Lanka’s 1996 cricket world cup victory against the Australians made it easier to convince the firm that what the Aussies can do, can be improved on here.

kkNever take no for an answer
It was clear that Clipsal – now marketing products under the Orange brand- needed to grow its product range, but the Australians, except for one guy, were adamant it wouldn’t make sense for Clipsal to invest in precision equipment required to manufacture the necessary components themselves for the product range expansion. Thus far, the company had been an assembler of electrical fittings.

The Australians’ refusal to source the component manufacturing machinery only emboldened the firm to look to other avenues. While the precision aircraft component-manufacturing machines it purchased were overkill for manufacturing light switch components it revealed a major weakness in its sourcing. “They were discouraging me from manufacturing the stuff because they were selling us those components at high prices. So the moment I started localizing, our margins became huge.” Clipsal was paying back in a year for the machines it was paying Rs40 million for each. Soon its Sri Lankan plant was the best in its entire group. His persistence didn’t come from within. “Another turning point was this guy (from Clipsal) saying, ‘don’t take no for an answer.’ So I was determined to prove to the Australians that we can do better than them,” says Kodituwakku who is Managing Director of the firm that now has a $70 million topline. For comparison that’s almost twice the top line of listed clothes retailer Odel PLC.

Growing up early
Kodituwakku is circumspect about the circumstances that thrust great responsibility on him at a young age. While he grew the business to $10 million before he was 30, it also denied him a carefree youth. He speaks glowingly about the equanimity; unusually for a 42-year old private sector leader. He sees no paradox in the firm’s drive towards a $1 billionmrevenue target –more than ten-times its current revenue –
and his personal equanimity.

“I’d rather hold things lightly,” Kodituwakku says about the grand corporate vision, which he passionately pursues. Like any other strategic leader, he focuses on growth and identifies 60 businesswise points where his input is critical. “It really helps in the business,” he says about the 10-day meditation retreats that he tries to do at least one of every year.

The obsession with balance started five years ago and now it’s an organisation-wide programme. Staff is offered karate, yoga and meditation sessions and they are offered paid leave to try the 10-day meditation retreat at a center off Kandy. Over 100 out of 1500 who work at the firm have done so at least once. “If you can keep your mind balanced the good and the bad does not affect you,” he says. When his awareness-of-self is high, he isn’t given to exuberance or gloomy. Age does bring wisdom and with old age comes a desire to not clutch too tightly. Kodituwakku says responsibilities thrust on him during his youth and an upbringing that deemphasized privilege maybe the reasons behind his early turn towards equanimity.

kk2Global ambition
To grow to a billion dollars, the firm is targeting 10 international units that will each contribute $100 million. In Sri Lanka – where all its manufacturing takes place – the firm is a $70 million dollar business. Its Singaporean, Australian and Chinese units are already operating and others in Europe, Asia and Africa will be launched soon.

Australian Clipsal is also no longer a joint venture partner. That partnership evaporated when Clipsal sold its business to French household electrical equipment maker Schneider which promptly tried to bully the local firm – as it was then known – in to selling out.

Kodituwakku nor his team could would budge on the Schneider (which had $10 billion in revenue) offer then. Clipsal was around a thousand times smaller than the French multinational. Schneider then blocked the firm using the Clipsal brand. However the local firm had already introduced its own Orange brand to the market; a cheaper range of products addressing the competition from cheap Chinese imports. Over a weekend Clipsal rebranded its products ‘Orange’.

“With our own brand, we were no longer restricted to just Sri Lanka.” In the first two years they concentrated on building the new brand. “I’m not worried about the future because I don’t have any expectations,” he says about personal ambition while having set a corporate goal of growing revenue ten-fold and global expansion. “When you expect something, and it doesn’t happen, then that’s a problem.”

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  1. Well done Kushan Kodituwakku,
    Persistance and foresight has yielded your firm success and put Sri Lanka into the global electrical trade.
    Wish you every success in the future.
    P.E Perera CEng MIEE
    Woodford,
    Essex,uk

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